He wound up fighting the Taliban. His unit’s worst day was Aug. 30, 2010, when a roadside bomb killed the battalion chaplain and four other soldiers.
“My focus was on doing my job and staying alive,” Newton said. But no matter what else was going on at the outpost, he said that once a month, he made his way to the wooden shack where the unit kept a laptop with a satellite internet connection. There, he made an online student loan payment of $100.
It was crazy that a soldier in a war zone had to worry about his student loans, Newton said. But he believed that if he didn’t pay his loans, “my credit would be shot.” The government offers student loan deferments to troops in wartime, but Newton said no one told him that.
Today, back home as executive director of the Wisconsin Veterans Chamber of Commerce, Newton said his state’s cuts to higher education will force more young people to face the same choices he did: Borrow or enlist.
“You shouldn’t have to go to war to get a college education,” he said. Newton hasn’t gone back to school.
In the last decade, Wisconsin has cut back sharply on appropriations for its state university system.
In 1974, state support for higher education was $14.73 per $1,000 of personal income, according to an analysis in the Milwaukee Journal Sentinel. By 2013, Wisconsin had withdrawn nearly two-thirds of that support, to $5 per $1,000.
The cuts deepened after Republican Scott Walker was elected governor in 2010.
When Walker took office, students paid about 37 percent of the cost of their education, according to data compiled by the State Higher Education Executive Officers Association. By the end of Walker’s first term, it was 47 percent. Consumer Reports August 2016
This package is the result of a partnership with Consumer Reports. Each nonprofit has contributed unique pieces of content to this project and our respective institutions operate independently. Any policy positions that Consumer Reports may take related to this issue do not reflect the views of Reveal, which does not take advocacy positions.
Amy Pyle – Editor in Chief @ Reveal from The Center for Investigative Reporting
Gwendolyn Bounds – Executive Director, Content @ Consumer Reports
Note: Joaquin Alvarado, CEO of The Center for Investigative Reporting, is on Consumer Reports’ board of directors.
By then, 70 percent of Wisconsin students graduated with debt – the third-highest percentage in the nation, according to the nonprofit Institute for College Access & Success.
Walker’s press office didn’t respond to repeated requests for comment. Walker froze tuition for in-state students in the University of Wisconsin System in 2013 but has continued to cut its budget by hundreds of millions of dollars. This month, he told Wisconsin Public Radio that he was considering providing extra support to the university.
Wisconsin’s trajectory follows a national trend.
After World War II, states appropriated more funds for public higher education and by 1975 were contributing 58 percent of the total cost. But since then, they have reduced their share steadily, pressured by, among other things, the rising costs of Medicaid and prisons. Today, it’s at 37 percent nationally, according to data from the U.S. Bureau of Economic Analysis.
To Thomas G. Mortenson, a senior scholar at The Pell Institute for the Study of Opportunity in Higher Education, the numbers reflect the betrayal of America’s youth.
“We ought to invest in the future, not take from the future,” said Mortenson, who has studied state funding trends for years. “Where I used to live, we called that eating our seed corn.”
Nearly every state pays a smaller percentage of the cost than in years past. A Chronicle of Higher Education study showed that in the quarter-century up to 2012, state support declined sharply. At the University of California at Santa Barbara, it plummeted from 54.1 to 23.4 percent. Michigan State University fell from 45 to 17.8 percent. At the University of Virginia, state support dropped from 36.9 to 14.4 percent.
As states cut back, universities raised tuition. To cover the increase, more students borrowed. It all meant more money for the loan industry.
Debt collection becomes a hot business
With a degree in criminal justice from La Salle University, a soaring loan balance and few prospects, Jessie Suren had begun to call herself “a student debt slave.” In 2012, she decided to work for the enemy, as she put it. Her job: collecting on delinquent student loans at a massive call center in Harrisburg, Pennsylvania.
Dialing for dollars
For nearly a generation after passage of the student loan program in 1965, employees in the Department of Education serviced and collected student loans, but during the Reagan presidency, the department began contracting with private companies to take over some debt collection. Eventually, all of this work would be done by private companies.Today, one group of contractors administers the loan program. These contractors provide information to students on the types of loans available and are supposed to help guide them through the thicket of choices. They later send out bills, keep tabs on payments and call borrowers if they fall behind.There are 11 major contractors, according to the department, the largest of which is Navient, a Sallie Mae spinoff. Overall, the servicing companies earn nearly $1 billion a year in fees.
If a student defaults on a loan (by going 270 to 360 days without a loan payment, depending on the loan type), then another group of the department’s contractors steps in.
The Department of Education has had contracts with 22 companies in what’s known as its private collection agency program. The department pays commissions and sometimes bonuses to companies based largely on the money they recover when former students default. For fiscal 2016, education department officials have estimated that these contractors will be paid $2.1 billion in commissions. Last year, the department announced that it would phase out contracts with five of the 22 private agency collectors for what it called “materially inaccurate representations” to struggling borrowers and transfer their accounts to the remaining contractors.
For about $12 per hour, she was one of hundreds of telephone collectors jammed together in the vast boiler room-like office of American Education Services, a loan servicing concern and U.S. Department of Education contractor.
